Two Visions Of America’s Future
On X yesterday, America 2100 shared a thread contrasting two different versions of retail. One was membership-only stores, as represented by Costco Wholesale Corporation COST and Walmart Inc.‘s WMT Sam’s Club. The other was open-to-all stores CVS Health Corporation CVS and Walgreens Boots Alliance, Inc.‘s WBA Walgreens. They made the point that only one of those models works well when there’s low social trust.
Walgreens Versus Costco
The contrast between the two stocks over the last year has been extraordinary. COST is up more than 60%, and WBA is down more than 60%.
What If Costco Is Forced To Be Inclusive?
In a quote post of America 2100’s thread, author Auron MacIntyre raised that question.
Did the federal government’s Equal Employment Opportunity Commission (EEOC) really sue gas stations for using criminal background checks to screen employees? Yes, they did. Via The Washington Examiner earlier this year:
Gas station chain Sheetz has been sued for conducting criminal background checks on its job applicants.
The lawsuit was filed by the Equal Employment Opportunity Commission and lists Sheetz, Inc.; Sheetz Distribution Services, LLC; and CLI Transport, LP as the defendants. The EEOC says that Sheetz has disproportionately screened out black, Native American, Alaska Native, and multiracial applicants from its hiring process due to the chain not hiring applicants with criminal conviction records.
It sounds like MacIntyre’s warning may eventually come to pass if current political trends continue in the U.S. With that in mind, let’s look at hedging Costco past November’s election.
Downside Protection For Costco
The 1 minute TikTok below shows a couple of ways of hedging Costco beyond the November election, using the Portfolio Armor iPhone app.
As you can see there, the hedging cost was 0.68% of position value. That was calculated conservatively, using the ask price of the puts). The optimal collar hedge shown in the video had a negative net cost. That means you would have collected a net credit if you opened that hedge.
You can download the Portfolio Armor iPhone app here.
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You can follow America 2100 on X here, and visit their site here.
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